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Malaysia’s economy to rebound faster once Covid-19 successfully controlled

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Malaysia’s economy is expected to rebound faster once the country has successfully controlled and alleviated the spread of the Covid-19 pandemic, says Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

He said this expectation is based on the effective lockdown index, whereby an international consultant had predicted that Malaysia is among the three countries with the most room to control and alleviate the Covid-19 pandemic in 2021.

The Finance Minister also quoted a news report from an international media company which ranked Malaysia as the fifth key investment and business destination among the world’s developing economies for 2021, surpassing China, the Philippines, India and Indonesia.

“This is based on the potential for rapid economic recovery, as well as the country’s stable fiscal and financial position, among others,” he said in the 35th Implementation and Coordination Unit Between National Agencies (Laksana) Report today.

He also cited a report by an international consulting firm which concluded that Kuala Lumpur remains attractive to the international business community, due to factors such as integrated infrastructure facilities, diversity and quality of human resource, as well as the country’s readiness in adopting digital technology.

“While the government is planning the nation’s economic journey post-Covid-19, certainly any decision must balance between existing resource management, as well as positive or multiplier impact in the short and long term.

“This approach will continue to be practised by the Ministry of Finance in the formulation of each policy,” he added.,”

Source: Bernama

Malaysia’s economy to rebound faster once Covid-19 successfully controlled


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Kedah is poised to receive investment in green vehicle technology and defence equipment industries worth RM1.5 billion, Menteri Besar Muhammad Sanusi Md Nor said.

He said the high impact project could propel the State to become a green technology vehicle assembly hub and major defence industry in Southeast Asia.

“The project will be handled by two large companies, namely Go Auto Group and Flumen Holdings Sdn Bhd which also has overseas business networks.

“Both companies are major players in the energy-efficient vehicle (EEV) and green technology industry as well as being involved in the supply of defence equipment and information technology,” he told reporters after a get-together ceremony with residents of Felda new generation housing in Felda Laka Selatan here, today.

He said Go Auto already has an automotive plant operating in Gurun since 2015 and the company is producing EEV under the Haval and Borgward brands, commercial van with Higer technology, as well as electric bus under its own brand, Go Auto.

Muhammad Sanusi said the investment was expected to create more than 8,000 job opportunities and brought in the world’s leading automotive and defence players.

Meanwhile, he said both companies would team up to own an 80% shareholding in Darul Aman FC Sdn Bhd (DFC) under a 5+5 years concession subject to agreement.

“For the shareholding in DFC, they will set up a special purpose company which will be signed later.

“The selection of these two companies is based on the track record and financial potential, independent football business development planning, as well as bringing in high impact value and investment activities to Kedah,” he added.

Source: Bernama

Kedah to receive RM1.5 bil investment in green vehicle tech, defence sectors


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The Asia-Pacific (APAC) region’s economic recovery will take the lead from the rest of the world as it recovers from the COVID-19 recession.

Moody’s Analytics chief APAC economist Steve Cochrane said this is after much of the region will have regained all of its lost output by the end of 2021, although India and the Philippines will struggle to reach this benchmark by the end of 2022.

“The region has much managed to contain the spread of COVID-19 as governments continue to work in obtaining sufficient vaccine supplies,” he said in an analytics note Wednesday.

Cochrane said the region’s manufacturing supply chains are fueling economic rebound on demand for goods related to the pandemic recovery such as computers, mobile phones, information technology (IT) systems, pharmaceuticals, and personal protective equipment-and consumer durable goods such as autos and household appliances, as well as holiday-related consumer goods.

On the other hand, he said policy has remained consistently supportive and should continue to be so through 2021.

In addition, the expected shift in US foreign policy under the upcoming administration of President-elect Joe Biden will also benefit the region, especially in deescalating the tensed relation between Washington and Beijing.

“The uncertainty that has weighed on global trade over the past two years will be lifted. The threat of higher tariffs on China’s exports to the US, or broader tariffs applied to goods exported by other APAC countries that have trade surpluses with the US, is expected to be stepped back,” he said.

In terms of monetary policy, he said that all the region’s central banks have quickly lowered their policy interest rates either to near zero or to historic lows when the pandemic became evident.

“Fiscal policy is also supportive and should remain so in the coming year.

“Malaysia, Singapore, Australia, Japan and Thailand stand out in terms of the amount of fiscal stimulus, and the targeted nature of their spending plans toward direct payments to households, support of small and medium industries, and extended assistance to hard-hit industries such as travel and tourism, which may well be the last sector to recover from the impacts of the pandemic,” he said.

However, Cochrane warns of near-term risks which could impact the regions recovery, including emerging COVID-19 clusters in the region that are not effectively contained, and similarly, much more strict economic shutdowns in Europe and North America that would staunch the rebound in global demand for goods.

Source: Bernama

APAC to Lead Economic Recovery Post COVID-19 Recession


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The vast business opportunities in the healthcare sector that have arisen because of the Covid-19 pandemic have seen many companies on Bursa Malaysia, including those whose core business is not related to the healthcare segment, venturing into the sector this year.

It is easy to see why. Rubber glove manufacturers, for one, have been recording super-high profits in this unprecedented time, and the momentum is likely to continue till at least the first half of 2021. Though interest in glove stocks has subsided of late, companies that have diversified into the glove business are set to come onstream from next year and reap the benefits of strong demand for gloves even in a post-pandemic era.

Mah Sing Group Bhd is one of these companies. The property developer recently obtained shareholders’ nod to diversify into glove manufacturing and is not ruling out the possibility of venturing into related healthcare products such as personal protective equipment (PPE) and pharmaceutical or medical products and services.

Its share price, which has been below RM1 in the past two years, touched an intraday high of RM1.47 on Oct 20, after its glove foray was revealed.

Titijaya Land Bhd is another developer that is proposing to diversify into healthcare products, with a distribution agreement with Rubberex Corp (M) Bhd. Under the pact, China’s Sinopharm Medical Equipment Quanzhou Co Ltd will buy gloves from Titijaya, which will be supplied by Rubberex. At the same time, Titijaya will buy the PPE and medical products from Sinopharm, which will then be sold and distributed to Rubberex.

Karex Bhd, the world’s biggest condom maker, also joined the fray after announcing plans to manufacture and sell gloves through its wholly-owned subsidiary Innolatex (Thailand) Ltd in August.

It will set up a new manufacturing facility in Hat Yai, Thailand, to supplement its existing operations there. Some RM40 million have been earmarked for the initial stage, to set up two production lines, which are expected to have an annual production capacity of 500 million pieces of gloves. At the time of writing, there was no update.

Meanwhile, AT Systemization Bhd, an integrated designer and manufacturer of industrial automation systems and machinery, appeared on the radar screen of investors when it announced that it was building a glove manufacturing facility in Perak. The stock’s trading volume hit 2.66 billion shares in a single day in November, accounting for 23% of the total share trading on Bursa. Its shares hit a peak of 30 sen on Nov 16 from below 10 sen early this year.

Having said that, none of the companies’ new glove ventures have taken off. Hence, their financial performance will be closely watched going into 2021.

Glove demand to stay robust

According to the Malaysian Rubber Glove Manufacturers Association (Margma), the global shortage of rubber gloves will last beyond 1Q2022. The current order lead time is at least six to eight months.

Global glove consumption is forecast to reach 390 billion pieces in 2021 from 330 billion pieces this year, representing an 18.2% growth year on year, says its president Denis Low.

CGS-CIMB Research is of the view that the global supply growth in the next two to three years is unlikely to catch up with the demand increase. This is despite the glove makers’ aggressive expansion plans to capture the demand growth.

“This is also assuming that there would be no supply disruptions (due to unforeseen circumstances) or delays in expansion plans (construction delays, raw material supply constraints and so on),” it says in a Dec 15 note.

The research house foresees global glove supply will grow 15% to 25% annually in the next two to three years, on the back of higher usage and increased healthcare awareness.

In a Dec 16 note, Hong Leong Investment Bank (HLIB) Research notes that demand requests from customers have not been decreasing or slowing down despite the positive inflow of vaccine news. “Rather, the actual demand and supply for gloves would be dependent on when the vaccine is ready for mass immunisation.”

HLIB Research estimates that the total production capacity for the big four glove players will increase 14.6% from 185.08 billion pieces this year to 212.15 billion pieces in 2021, and a further 6.3% to 225.48 billion pieces in 2022.

Companies associated with the glove industry are also beneficiaries of the strong global demand for gloves. Shares in HLT Global Bhd have jumped sixfold year to date, underpinned by its rubber glove dipping line manufacturing business. ES Ceramics Technology Bhd, which makes hand formers used by the glove industry, more than doubled during the same period.

Beneficiaries of the healthcare wave

Given that wearing face mask is mandatory in most countries, companies involved in the manufacturing of PPE are also riding the healthcare wave.

Those that have diversified into this segment this year include Notion VTec Bhd, Komarkcorp Bhd, Iconic Worldwide Bhd, SCGM Bhd and Pecca Group Bhd.

Not forgetting companies that produce the raw materials — the likes of Tek Seng Holdings and Oceancash Pacific Bhd — to manufacture face masks and protective gowns.

Luxchem Corp Bhd’s latex and nitrile processing and compounding business has also been given a boost by the surge in demand for PPE and rubber gloves.

Texchem Resources Bhd, which is engaged in the restaurant, industrial, food and polymer engineering sectors, has received the Malaysian Investment Development Authority’s green light to produce face shields.

Other chemicals companies such as Samchem Holdings Bhd, Hexza Corp Bhd and Hextar Global Bhd are also beneficiaries as their chemicals are used for the manufacturing of personal care products.

Many may not be aware that a company such as D’Nonce Technology Bhd is a beneficiary of Covid-19. It is involved in producing packaging boxes for major glove makers in Thailand.

Also, Supercomnet Technologies Bhd, an original equipment manufacturer in the automotive cables and medical devices industry, has seen a spike in order volume since the pandemic began.

Meanwhile, technology solutions provider K-One Technology Bhd has been granted a licence to manufacture and distribute low-cost ventilators for Covid-19 patients. In September, it also obtained approval from the Medical Device Authority, an agency under the Ministry of Health, to supply nasal swabs in Malaysia.

Over in the vaccine space, the impact of the government’s direct deals — with vaccine developers such as Pfizer, Covax and, most recently, AstraZeneca — on the so-called private arrangements remains unclear at this juncture.

Bear in mind that any vaccine to be distributed in Malaysia has to get the green light from the National Pharmaceutical Regulatory Agency (NPRA).

In the case of Pfizer, Health director-general Tan Sri Dr Noor Hisham Abdullah said last week that its vaccine will have to go through a five-phase evaluation process in Malaysia before it can be approved for use by the public. The first phase of the process can take between 90 and 120 days.

A day later, however, he said the Ministry of Health would try to cut the evaluation time for the Pfizer vaccine to less than 90 days, so that a conditional approval for the drug may be granted before next March.

Pharmaniaga Bhd, Bintai Kinden Corp Bhd, Ho Wah Genting Bhd, Solution Group Bhd, Kanger International Bhd, MyEG Services Bhd, Yong Tai Bhd, Nexgram Holdings Bhd and Metronic Global Bhd have announced their vaccine deals.

So far, only Solution and Pharmaniaga will be carrying out the fill-and-finish process in Malaysia. Recently, Solution obtained the NPRA’s approval for the design plan and layout of its vaccine fill-and-finish facility.

Solution has been the best performer in terms of share price, rising 1,500% since early this year.

Pharmaniaga’s fill-and-finish is pursuant to its agreement signed with Serum Institute of India Pvt Ltd in October. The fill-and-finish product will be marketed, distributed and sold exclusively in Malaysia by Pharmaniaga.

The recent news of Bintai Kinden’s two largest shareholders selling stakes in the company caught many by surprise, as the potential earnings from the new venture has yet to kick in. Its second-largest shareholder, Nusankota Development Sdn Bhd, sold its entire 14.4% stake in the engineering and construction company. Also, the largest shareholder, Bintai Holdings (M) Sdn Bhd, disposed of an 8.14% equity interest in the company, reducing its shareholding to 9.05%.

Still, not all healthcare ventures have been successful. Early this month, Hong Seng Consolidated Bhd, formerly known as MSCM Holdings Bhd, and RP Integrated Bhd mutually terminated their medical drugs and vaccines joint venture just two months after signing the deal. Hong Seng’s 51%-owned HS Bio Supplies Sdn Bhd and RP Integrated had entered into a partnership to pursue distributorship and opportunities relating to medical drugs and vaccines from China’s Shanghai Fosun Pharmaceutical Group Co Ltd.

Source: The Edge Markets

Surviving The Impact of Covid-19: Healthcare the sector with the most deals


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Malaysian researchers have developed a method to transform the fibre found in normally discarded pineapple leaves to make a strong material that can be used to build the frames for unmanned aircraft, or drones.

The project, headed by Professor Mohamed Thariq Hameed Sultan at Malaysia’s Putra University, has been trying to find sustainable uses for pineapple waste generated by farmers in Hulu Langat, an area about 65 km (40 miles) from Kuala Lumpur.

“We are transforming the leaf of the pineapple into a fibre that can be used for aerospace application, basically inventing a drone,” he told Reuters at a workshop.

Mohamed Thariq said drones made out of the bio-composite material had a higher strength-to-weight ratio than those made from synthetic fibres, and were also cheaper, lighter and easier to dispose of.

If the drone was damaged, the frame could be buried in the ground and would degrade within two weeks, he said.

The prototype drones have been able to fly to a height of about 1,000 metres (3,280 ft) and stay in the air for about 20 minutes, he added.

Ultimately, the research team hopes to create a larger drone to accommodate bigger payloads, including imagery sensors, for agricultural purposes and aerial inspections.

“Our role here is to help the industry, the farmers, to increase their yield and make their jobs much easier,” said William Robert Alvisse of the Malaysian Unmanned Drones Activist Society, a non-governmental group helping to design the drone and advising on the project.

Before the project launched in 2017, pineapple stems were discarded after the once-in-a-year harvest period, but farmers hope the drones project will encourage more innovation to find uses for the waste and boost incomes.

“With the health issue, the economy problem due to COVID-19, the society is desperate and there is no alternative to increase income,” said pineapple farmer Irwan Ismail.

Source: Reuters

Malaysian team turns pineapple waste into disposable drone parts


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Malaysia needs to increase investments in downstream processing activities and shift towards generating more value-added palm oil products.

Plantation Industries and Commodities Ministry secretary-general Datuk Ravi Muthayah said the palm oil industry should move towards high value-added and not be risk-averse in business decisions as traders cannot depend solely on palm oil as a commodity

“This is because palm oil is always subject to price volatility and uncertainties,” he said during the Malaysian Palm Oil Trade Fair and Seminar 2021 (POTS Digital 2021) today.

With stricter global market requirements, he said it is important to strategically position palm oil in new emerging markets, particularly in untapped markets and also some markets that had not heard about palm oil as edible oil.

“To further promote our products as a sustainable and safe oil for consumption, we may want to venture into and explore non-traditional markets in the Middle East, Northern Africa and Eastern Europe where the market remains largely untapped,” he said.

Nevertheless, Ravi said palm oil would continue to face challenges as long as there are other competing edible vegetable oils.

As such, he hoped market players would continuously engage themselves in dispelling misconceptions and disseminating true information about palm oil, in terms of its versatility, health aspects, economic contribution as well as worker’s rights.

“Worker’s rights are equally important and should not be taken lightly. This is important to ensure the palm oil industry is viewed as a responsible and caring industry,” he said.

Themed “Malaysian Palm Oil – Forging Ahead in the New Norm”, the four-day virtual event which starts today is organised by the Malaysian Palm Oil Council.

A total of 27 papers will be presented during the seminar, covering topics such as the current issues in the palm oil industry, market challenges and development, sustainability challenges, innovative applications in the industry, nutritional and dietary aspects, as well as market updates and price forecasts.

Source: Bernama

Malaysia needs to invest in, generate more value-added palm oil products


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ASEAN countries should work towards international standards in providing universal internet connectivity in order for the digital economy to grow, said a digital marketing and personal branding trainer.

The founder of Digital Marketing Rider, Shalini Subramaniam, said an education system that will adapt to demands for a digital future and stronger safety nets for data protection is needed for the growth of the digital economy.

In an exclusive interview with Bernama recently, she said that Southeast Asia has the potential to become one of the world’s top digital economies because it is the fastest-growing internet market in the world.

She also quoted a report by the Communications Department of the International Monetary Fund (IMF) which says that the Internet has reached most people in Brunei Darussalam, Malaysia, and Singapore, but more than 70 per cent of Cambodia, Indonesia, Laos and Myanmar remains offline and can’t fully participate in the digital economy.

Shalini said connectivity is a critical tool to enhance opportunities for individuals and companies and added that access to a broadband network is essential for the success of digital entrepreneurs, namely from the ASEAN member states.

She opined that key obstacles like lack of digital awareness and trust in digital technologies need to be addressed first in each ASEAN member state in order for the small and medium enterprises (SMEs) to achieve full potential in the access and use of digital technologies.

“It is important for ASEAN  to identify reliable broadband services besides strengthening the key enablers of Internet growth. Forming a task force will help to identify these key matters to shape and support the implementation,” she said.

Asked whether specific laws are needed to help guide and regulate the digital economy in Malaysia, Shalini said as the government continues to support and focus its efforts on building the nation’s digital economy, more specific policies to monitor and supervise online transactions to secure customer privacy, trust and security need to be introduced.

In a related development, Shalini said Malaysians are also increasingly looking towards online solutions for their everyday needs.

She said Malaysians understand that digital payments are not only safer but also efficient and cost-effective as they don’t need to manage physical money.

The digital marketing trainer said according to Malaysia Digital Marketing Statistics 2020, an average Malaysian spent time using the internet for 8 hours and 5 minutes a day.

“Malaysia has 80 per cent of Internet penetration by total population as of Jan 8, 2019.

“Understanding this, more businesses will adopt digitalisation, which means Malaysia’s digital economy is set to continue its growth momentum,” said the certified eUsahawan Trainer from Malaysia Digital Economy Corporation (MDEC).

Shalini said the COVID-19 pandemic has severely impacted business start-ups in Malaysia and it is crucial for the government to provide them with – among others – tax exemptions at a certain rate, besides mentorship programme and training opportunities.

She said this should be done across all different industries and sizes of businesses.

Malaysia will chair the first ASEAN Digital Ministers’ Meeting (ADGMIN1) via teleconference from Jan 21 to Jan 22.

Themed “ASEAN: A Digitally Connected Community”, the meeting seeks to strengthen cooperation among ASEAN countries towards building digital ecosystems as a pillar in the post-COVID-19 development plan.

The Association of Southeast Asian Nations or ASEAN has 10 member states namely Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Laos, Myanmar, Cambodia, and Vietnam.

Source: Bernama

ASEAN Should Work Towards International Standards in Providing Universal Internet Connectivity


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Recognising the necessity and opportunity to transform, 60 per cent of executives surveyed under IBM Institute for Business Value (IBV) — Digital Acceleration Study indicated that they have accelerated their companies’ digital transformation amidst the Covid-19 pandemic.

IBM Malaysia managing director Catherine Lian said two-thirds of the respondents said the pandemic allowed them to advance specific transformation initiatives that had previously encountered resistance.

“In business, challenges can create opportunities for organisations to emerge, grow, and even leapfrog the competition.

“The mix of key technology adoption together with tech-enabled capabilities will continue to be important in propelling businesses as they move into 2021,” she said in a statement today.

The IBV study revealed that cloud, artificial intelligence (AI) and mobile are essential technologies that provide the greatest performance impact for organisations across industries.

Cloud and AI have become more important as performance differentiators, said Lian, adding that about 74 per cent of the top performers surveyed likely to use hybrid cloud to improve the security and resiliency of critical business processes.

“At IBM, we see an acceleration in the adoption of hybrid cloud as a result of the pandemic as companies turn to application modernisation, process automation, and AI infusion in business operations.

“A hybrid cloud platform approach delivers 2.5 times more value than a traditional approach,” she said, noting that cloud has become a more important performance differentiator in 11 out of 18 industries analysed since the pandemic.

Citing IBV’s report titled “The Hybrid Cloud Platform Advantage: A Guiding Star to Enterprise Transformation in Malaysia”, she said organisations in Malaysia expect to be using an average of nine clouds per organisation from a growing number of vendors.

They also plan to increase the share of spending on hybrid cloud from the current 36 per cent to 46 per cent by 2023.

Source: Bernama

IBM: 60pc of executives accelerate digital transformation amid pandemic


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GDP likely to grow between 6% and 7%

While the global economy is on the road to recovery with the availability of Covid-19 vaccines, there are pertinent issues which may dampen its growth and put a strain on the Malaysian economy.

However, economists are upbeat that the domestic economy is poised for growth as there are bright spots that could lift the economy. They are projecting a gross domestic product (GDP) growth of anywhere in the region of 6% to 7.3%.

Geo political risk from the tensions between the United States and China resurfacing, the efficacy of Covid-19 vaccines in preventing the disease, and uncertainty closer to home as well as fiscal imbalances are some of the factors that may impact the local economy, according to the economists.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told Starbiz that the relationship between the United States and China would continue to hog the limelight.

“We know that China has been very consistent in the quest to become technological prowess and the outcome was very visible via their global presence, especially in the areas of 5G technology.

“And given that digitalisation will be at the forefront in every country’s growth strategy, this could be a source for potential friction between the two superpowers. Geopolitical risks are something which is unavoidable but it has to be managed so as not to put a dampener on the global economy,” he said.

Ambank Group chief economist Anthony Dass said the short and long-term political and geopolitical risks would outline how Covid-19 would exacerbate pre-existing domestic tensions in many countries, adding that the outcome would depend on availability of the vaccine.

As Malaysia is an open economy, he said conflicts in the Middle East, the political crisis in Europe and the unfolding issues post the US presidential election may see some impact on the world economy.

With the 4th Industrial Revolution, Dass said information technologies would dramatically change labour models in a wide range of industries in 2021, especially due to improvements in the fields of automation and artificial intelligence.

The challenge, he said, would be acute for emerging markets where governments that can’t quickly evolve their social contracts to meet middle class expectations would see spiraling social instability.

Dass said on the domestic side, the year 2021 would also shed light on how global rating agencies would view Malaysia in relation to its status on the FTSE Russell Bond index (WGBI), inflows of foreign direct investments (FDIS) and rate of implementation of policies and domestic political scenario.

FTSE Russell in October last year kept Malaysia in its negative watchlist at its annual review of its flagship World Government Bond Index (WGBI).

On Dec 4 last year, Fitch Ratings downgraded its ratings on Malaysia to BBB+ from A- on the back of the negative impact of the Covid19 pandemic on the country’s fiscal position as well as the ongoing political situation.

Afzanizam said uncertainty arising as to when the 15th general election would be held and the government’s efforts to restore fiscal imbalances would be closely watched by investors.

Issues like the possibility to reinstate the goods and services tax and subsidy reforms could potentially be on the public radar, he noted.

He said this may cause some form of anxiety among the public as cost of living is expected to be in the spotlight again following the expected rise in fuel prices.

“The forecast numbers for GDP are very fluid at the current juncture. Although the governments in various jurisdictions have allowed the emergency use of Covid-19 vaccine, the logistic issues remain.

“What we know is that the economic stimuli from both fiscal and monetary are huge. If the reopening of the economy happens as planned, the country should be able to record a decent recovery next year,” Afzanizam said.

In the third quarter, the GDP improved with a slower contraction of 2.7% year-onyear (y-o-y) versus a 17.1% y-o-y contraction in the second quarter.

The Finance Ministry is projecting a GDP growth of 6.5% to 7.5% in 2021 as it predicts the economy to shrink by 4.5% year-on-year in 2020 due to the adverse effects of the pandemic.

Amid the headwinds and geo political issues, economists are still bullish on the domestic economy. The external sector appears to be forthcoming, especially in the technology sector, Afzanizam said.

The World Semiconductor Trade Statistics (WSTS) has projected that the global semiconductor sales would accelerate to 8.4% in 2021 from an estimated 5.1% growth this year.

Judging from this, Afzanizam said this would benefit Malaysia’s electrical and electronics (E&E) exports which in turn would give a further boost to the domestic manufacturing sector.

He said the government’s all-time high development expenditure of Rm69bil should also be able to resuscitate the construction sector.

“If the reopening of the economy proceeded as planned, we should be able to see a respectable growth trajectory next year,” he noted.

Juwai IQI chief economist Shan Saeed said there are key drivers for Malaysia’s growth. Oil prices are expected to go north ie: US$50 to US$65 per barrel in 2021 which would be a boon to the country.

He noted that with the Chinese investments flowing back to Malaysia, Covid-19 coming under control, acceleration of technologydriven initiatives, higher palm oil prices stabilising above RM3,000 to RM3,500 per tonne and rolling out of infrastructure projects would spur the domestic economy next year.

Source: The Star

Bright spots to lift domestic economy


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After a tumultuous 2020, a better outlook awaits Asian companies, on expectation of a recovery in the macro economy and corporate earnings.

There is a bright earnings outlook for 2021, and further boosting returns will be expectations of an earnings recovery in 2022.

Citigroup, Goldman Sachs and Nomura have pencilled in more than 20% earnings growth for Asian stocks.

While Citi analysts see prospects for profit growth to be strongest in South Korea, how would the prospects be for some of the listed companies in Malaysia?

A random survey revealed that some are looking at a 10% to 20% earnings growth while others will stay on track to achieve their medium-term growth targets.

They see risks such as a prolonged pandemic, rising commodity prices and shortage of containers hampering exports and imports, and have come up with some survival strategies.

International energy services group Serba Dinamik Holdings Bhd expects a 15% to 20% growth for next year and the subsequent two years, propelled by a sustainability and technology-based strategy.

“As sustainable elements are put in place, we expect the risks to be manageable,’’ said Serba Dinamik CEO Datuk Abdul Karim Abdullah.

Some of its strategies include planning a sustainable financial model to ensure the group has sufficient cash in hand, and strengthening its geographical presence to focus on more stable countries.

With the implementation of environment, social and governance elements, Serba Dinamik employs local workers in its move to create harmonious relationships, and help narrow the gap between rich and poor.

The company also aims for minimal damage to the environment to avoid protests from people around areas where jobs are carried out, and any summons from authorities.

In terms of governance, it will run its operations according to rules and regulations to avoid any disruptions in the implementation of services, or project delays.

For this year, industrial chemicals supplier Luxchem Corp Bhd which supplies raw materials to the glove industry, has set a higher growth target of 10% to 15%, compared with its previous targets of just 10%.

“Against the roll-out of the Covid-19 vaccine and expectations of market recovery, we foresee the glove industry will continue to grow,’’ said Luxchem CEO Tang Ying See.

There are risks involving, among other things, a shortage of containers, demand and supply of raw materials, fluctuations in foreign exchange and further lockdowns.

But Luxchem will stay focused on its main industries, expand its product range and also stay close to its customers while providing good technical support.

Noting current challenges such as worldwide container shortages and rising raw material prices, Scientex Bhd, a supplier of industrial and consumer packaging, believes these should normalise in the near term.

“We expect continued growth over the next few years based on the uptrend in demand for flexible packaging globally,’’ said Scientex chief operating officer (packaging business) Choo Seng Hong.

While accelerating the development of sustainable flexible packaging solutions, the next milestone in the group’s target to “double up every five years,” would be financial year 2023.

To mitigate issues related to timeliness of logistics and raw material prices, Scientex keeps close communication with its customers and suppliers to minimise potential disruptions.

To address environmental concerns on the use of plastic packaging, the company takes part in the circular plastic economy that emphasises on restoration and regeneration.

Having acquired 2,600 acres of new land, Scientex will accelerate the scale of affordable property launches, expanding beyond its stronghold in Johor and Melaka to the Klang Valley, Seremban, Ipoh and Penang.

“Demand for affordable homes is expected to be resilient, as the property division is also aligned to the group’s target to achieve a doubling of growth every five years,’’ said Scientex chief operating officer, property division, Datuk Alex Khaw Giet Thye.

Meanwhile, IHH Healthcare Bhd, Asia’s largest private healthcare group, is on track to double its return-on-equity in the next five years, by growing in a capital efficient manner.

“Despite facing the most significant crisis of our lifetime in Covid-19, IHH has remained resilient and is in a strong financial position,’’ said IHH managing director and CEO Dr Kelvin Loh.

As patients returned in strength since June, IHH had also created new revenue streams including Covid-19 related services, and improved its case mix that provides a consistent method of classifying patients while keeping tight cost controls.

IHH also stands ready to support governments in administering the vaccines once they are available in the markets it operates in.

Amid the pandemic, the group accelerated its move into telemedicine globally, and has completed its acquisition of Prince Court Medical Centre under its strategy to expand clusters in metro areas.

As companies increase or maintain their growth expectations, they stay nimble to cope with any sudden, unwelcome changes in the virus scene.

A random survey revealed that some are looking at a 10% to 20% earnings growth while others will stay on track to achieve their medium-term growth targets.

Source: The Star

Asian companies hope for better prospects


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Sarawak remains an attractive investment destination as it continues to draw interest despite the movement restrictions and economic slowdown due to Covid-19.

The investors are from South Korea, Australia and China, among others.

Speaking at the committee installation ceremony for Sarawak Association of Maritime Industries (Samin) in Sibu, International Trade and Industry, Industrial Terminal and Entrepreneur Development Minister Datuk Amar Awang Tengah Ali Hasan said although foreign investments were important for Sarawak’s development, the state would also like its domestic industries to benefit and was putting in place a more inclusive development strategy going forward.

“For Sarawak to be competitive globally, our industry players must keep themselves abreast of the latest technology and be creative and innovative. Adoption of Industry 4.0 is the way forward.

“We cannot continue with low-cost and labour-intensive industries, especially during the pandemic when labour shortage is an issue, ” he added.

For the first nine months of this year, Sarawak ranked first in terms of investment value in Malaysia in the manufacturing sector, with a total approved investment of RM15.8bil.

“With the help of my ministry and Mida, a group of executives from South Korea came to Sarawak recently and underwent the mandatory 14-day quarantine before conducting their assessment of Sarawak, ” said Awang Tengah.

On the maritime industry, he said it had made a sizeable contribution to the state’s economy with exports valued at RM279mil in 2018, RM349mil in 2019 and RM168mil last year up to October.

He said that as the industry would continue to play an important role in the state’s economic development – especially in Sibu – his ministry would continue to provide the necessary support so that the industry could continue to grow.

Awang Tengah said with the completion of the Rantau Panjang Industrial Estate Phase I upgrading work costing RM11.7mil, his ministry was now undertaking the development of additional 8.4ha in Phase II.

“Earthworks will commence soon, and we expect to complete the extension works by end of 2022.

“This extension work is upon the request of Sibu Shipyards Association.

“My ministry also plans to develop Tanjung Manis Marine Engi-neering Park in Paloh covering an area of 400ha under RMK-12, as the location is suitable for bigger vessels.

“Paloh will provide better opportunities for companies to become big players in shipbuilding, ship repairs and the oil and gas industry, ” he added.

Meanwhile, earthworks for Sibu Industrial Park covering an area of 60ha have commenced.

This industrial park caters to local small and medium enterprises.

Awang Tengah, who is also a Deputy Chief Minister, said the project was delayed due to the MCO and the recent bad weather but assured that the park was expected to be completed by end of 2023.

He noted that there were around 100 shipyards nationwide currently and 60 of them were located in Sarawak.

“Of the shipyards in the state, 40 are operating in Sibu specialising in building and repairing small to medium-sized vessels such as tugboats, offshore support vessels, barges and passenger boats.

“Sibu certainly has the potential to be the centre for Malaysia’s maritime industry, ” he added.

At the installation ceremony, Awang Tengah urged Samin to work closely with his ministry to come up with proposals on global movement restrictions for the consideration of the State Disaster Management Committee in light of the Covid-19 pandemic.

Samin, formed on Oct 25,2018, has members representing a broad cross-section of the industry comprising shipbuilding, ship repairs, marine maintenance, engine repair and overhaul, naval architects,

maritime consultants and academia, marine product manufacturers and the supporting industries.

Samin’s new president Renco Yong outlined three future plans.

They include publishing a book on Sarawak’s shipbuilding, ship repairs, maritime industries and ship design, publishing a “facilities map” for the state’s maritime industries, and collaborating with Sarawak Timber Industry Development Corporation to further study the establishment of 800ha land as a maritime industrial area with a special economic zone that provides special tax incentives.

Source: The Star

‘State still drawing foreign investors’


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Asian factory activity expanded moderately in December thanks to robust demand in regional giant China, business surveys showed on Monday, but the prospect of tougher coronavirus curbs clouded the outlook for the recovering sector.

Manufacturing activity expanded in Japan, South Korea and Taiwan, according to PMI surveys, the latest indication that manufacturers in the region continue to bounce back from the damage caused by the COVID-19 pandemic last year.

But a slowdown in China’s factory activity growth underscores the challenges the region faces as rising cases globally force many countries to reimpose curbs on economic activity, clouding the outlook for exports.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell in December to 53.0 – its lowest level in three months – but stayed well above the 50-level that separates growth from contraction.

“External demand was likely impacted by the continued global spread of COVID-19 and reimplementation of lockdowns,” HSBC’s China economist Erin Xin said in a research note.

The reading, which was lower than November’s 54.9, fell roughly in line with the official gauge of factory activity that showed activity moderating at a high level.

Elsewhere in the region, output stabilised in Japan for the first time in two years, while India’s factory sector ended a rough 2020 on a stronger note as manufacturers boosted production to meet rising demand.

The final au Jibun Bank Japan PMI rose to a seasonally adjusted 50.0 in December from the previous month’s 49.0, ending a record 19-month run of declines.

“Japanese manufacturers signaled a broad stabilization in operating conditions at the end of a tumultuous year,” said Usamah Bhatti, an economist at IHS Markit.

The modest improvements in manufacturing activities were in contrast to sharp rises in stock prices, which some analysts say have benefited from ample global monetary stimulus but are not justified by the continued weakness in many economies.

Japan’s Nikkei average ended 2020 up 66% from the year’s low hit in March, even as the world’s third-largest economy suffered a deep recession due to the hit from COVID-19.

A slowdown in U.S. business activity in mid-December did little to halt a surge in equities that drove up the S&P 500 index by over 16% last year.

“We’re seeing a huge divergence between the dismal state of the economy and zooming stock markets, as investors price in a best-case scenario under which vaccines will help contain the pandemic this year,” said Izuru Kato, chief economist at Totan Research in Tokyo.

“Things might not turn out as rosy as investors believe, which means asset prices could already be experiencing a bubble. But for now, investors have little choice but to ride the tide.”

China’s industrial sector has staged an impressive recovery from the coronavirus shock thanks to surprisingly strong exports, helping brighten prospects for Asia’s recovery.

But a resurgence of infections is forcing some western countries to reimpose strict controls on economic activity, clouding the outlook for exports including those from China.

Japan may join other countries in applying tighter restrictions with Prime Minister Yoshihide Suga signaling on Monday the chance of declaring a state of emergency for Tokyo and three surrounding prefectures.

Source: Reuters

Asian factories bounce back from COVID-19 hit


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Malaysia’s massive Budget 2021 will cushion the economic downturn, but the country’s economic rebound will depend on the return of global trade, says Moody’s Analytics.

Its economist Denise Cheok said lockdowns across Europe and the United States pose significant downside risks, even with vaccine rollouts.

“Vaccine distribution will take time, and consumer spending will likely only revive gradually,” she said in a note today.

Malaysia’s Budget 2021 is the largest in the country’s history, with its allocation of RM322.5 billion.

On exports, she said Malaysia is set to raise its export tax on palm oil from Jan 2021.

“This will likely boost exports in December as buyers from India and China front load demand,” Cheok said.

She pointed out that Malaysia’s agriculture export in November was boosted by high demand for palm oil and related products.

Meanwhile, she said retail sales – which have been weak since the second quarter last year – will likely remain below pre-COVID-19 pandemic levels until the middle of this year.

Cheok said consumer and investor’s sentiment took a hit in November after the surge in COVID-19 cases triggered partial movement control orders in most states.

Source: Bernama

Malaysia’s economic rebound depends on global trade – Moody’s Analytics


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The headline IHS Markit Malaysia Manufacturing purchasing managers’ index (PMI) rose to 49.1 last month from 48.4 in November 2020, indicating an improvement in the country’s manufacturing sector.

In a statement today, IHS Markit said the reading was the highest seen since August 2020.

However, it noted that the ongoing disruption caused by the Covid-19 pandemic saw many companies facing difficulties in sourcing and receiving raw materials, resulting in longer delivery times and a sharp increase in input costs.

IHS Markit said data last month suggested that output and new orders remained subdued as market demand continued to be dampened by impacts caused by the pandemic.

Foreign demand for Malaysian manufactured goods also declined, although some firms have reported returning orders from markets outside Asia.

It said although production volumes and sales moderated further in the final month of 2020, employment levels were broadly stable for the first time since May.

“More positively, Malaysian goods producers signalled a broad stabilisation in employment levels.

“Preparation for orders in the future requires additional capacity, pushing the survey’s employment index to the highest for nine months in December.”

In terms of input costs, IHS Markit said it had increased for the seventh consecutive month in December, reflecting the rising cost of raw materials and logistics, most notably shipping costs.

“The rate of input cost inflation accelerated to the fastest in just over three years, and was sharp overall,” it said, adding that manufacturers had partially passed these higher costs through to clients in the form of higher output charges.

However, IHS Markit sai, inventory levels fell last month, as some businesses were reluctant to hold onto pre- and post-production goods, while others reported that supply delays had hindered efforts at restocking.

Looking ahead, it said Malaysian manufacturers are cautiously optimistic regarding the outlook for output in the coming year.

“Although firms continue to record positive sentiment, optimism eased to the softest since August.

“Panel members attributed the positive outlook to hopes of a recovery in both domestic and external demand that will boost production levels over the next 12 months.”

The IHS Markit Malaysia Manufacturing PMI is compiled by IHS Markit from responses to questionnaires sent to purchasing managers, involving around 400 manufacturers.

The indices vary between 0 and 100, and a reading of above 50 indicates an overall increase, and below 50 an overall decrease.

Source: Bernama

Malaysia manufacturing PMI hits 4-month high in Dec 2020


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K-Star Sports Ltd, which is listed on Bursa Malaysia, will partner with new glove industry player AT Systematization Bhd (ATS) to promote, market and sell the medical gloves produced by the latter in China and Taiwan.

The sports footwear and apparel group, which is headquartered in China’s Fujian Province, said wholly-owned unit K Star Healthcare Sdn Bhd today signed a provisional offtake agreement with ATS’s unit AT Glove Engineering Sdn Bhd.

K-Star said it had an extensive base and sales network in China and Taiwan.

“The faster lead time for delivery under ATS compared to the incumbent players also give the two companies an advantage to tap into the Chinese market,” the group said in a statement.

K-Star executive chairman Ding Jianping said the demand for medical gloves remained very strong despite the availability of the Covid-19 vaccine.

“This is as the escalation of infected cases is not showing any signs of abating. Aside from that, the mass deployment and the effect of the vaccine would take time.

“Gloves would still be needed for testing and administrating the vaccine as well,” he said.

AT Glove would assist K-Star in obtaining any required export or import license or other authorisation necessary for the export from Malaysia to China and/or Taiwan, said Ding.

Meanwhile, ATS managing director Choong Lee An said since the opening of its glove production factory at the end of December 2020, ATS had received a lot of enquiries for its products.

“Being a new player in this industry means that we have faster lead time for our delivery, as compared to getting from the incumbent players. Besides that, our products are certified by European CE Certification, which will give the confidence to our customers,” Choong said.

Source: Bernama

K-Star Sports partners AT Systematization to market gloves in China, Taiwan


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ITRAMAS Corporation Sdn Bhd remains optimistic of its business prospects and targeting a higher revenue of RM300 million this year from RM250 million previously, for its multiple segments, mainly green technology.

Group managing director/chief executive officer Lee Choo Boo said the target was driven by a few ongoing as well as upcoming projects secured locally, and internationally in the United Kingdom, Vietnam, South America, Africa and Middle East.

“With the three solar photovoltaic power plants concurrently in Melaka, Terengganu and Kedah now operational with a higher than expected output of between six and eight per cent, we expect the solar segment to contribute around 60 over per cent to revenue this year while the remaining to be under the smart cities part,” he told Bernama recently.

ITRAMAS which was established in 1999, is a green and sustainable infrastructure development company in Malaysia. Based in Kuala Lumpur, it has expanded into multiple sectors which include large-scale-renewable energy, energy efficiency, smart city and electronic manufacturing services.

Throughout the years, the company has successfully deployed close to RM2 billion worth of green and sustainable projects, and currently is the largest solar energy producer in Malaysia with 200MWp in operation.

In regard to demand for solar energy, Lee said there is a growing trend in the commercial and industrial sectors but lower interest in the residential area.

“Solar is gaining attention in the country right now. From the business part, we can see more than 100 companies bidding for the large-scale-solar 4 tender, which is very competitive.

“As an industry player, we are now looking at promoting and going into the residential area for solar energy

“We believe that in the next couple of years, that (residential area) will be a major segment as people become more aware about going green; it can save money, and improvement in the storage technology,” he said.

Going forward, Lee said the solar sector would definitely be a main sector, especially in the current period where not many infrastructure projects were going on due to the pandemic while solar seems to be abundant.

On energy efficiency services that include research and development of LED products, high-value-add manufacturing, energy performance contracting, operations and maintenance for public lighting, he said these were all highly customisable to suit the needs of every client.

“We are also actively rolling out smartphones, smart lightings which eventually are part of 5G infrastructure, connected lighting and solar power street lighting.

“So this would allow us to basically bring green energy and roll out energy efficiency street light to rural areas where you do not need electricity cable infrastructure as it is self-sustaining,” he added.

Recipient of the Global Good Governance Awards – 3G Green Innovation and Solutions Award 2020, ITRAMAS has completely dedicated a research and development (R&D) centre in Penang, focusing on product R&D, project finance and investment, product manufacturing, project development, design and installation and operation and maintenance.

“These are amongst our solutions to support the use of sustainable and renewable energy. Towards that objective, we will continue to support the growth of the green technology as a new development model to enhance the sustainability of our clients as well as country,” Lee said.

Source: Bernama

ITRAMAS targets 60 pct revenue from solar segment


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The Communications and Multimedia Ministry (KKMM) will focus on efforts to speed up the provision of facilities for internet access in last mile locations or the interior of several areas throughout the country this year.

Minister Datuk Saifuddin Abdullah said although various initiatives under the National Digital Infrastructure Plan (Jendela) would be implemented as scheduled, efforts to provide infrastructure for internet access should be speeded up.

He stressed that it was KKMM’s target to ensure that internet would be made available to about four percent of areas in the east coast and several other locations in the peninsula and the interior of Sabah and Sarawak which are still without this communication facility.

“The internet facility provided should be practical; for example, longhouses in Sarawak are not compatible to fibreoptic or broadband infrastructure but suitable to use satellite.

“(In Sarawak) I told SKMM (Malaysian Communications and Multimedia Commission) we need to speed up proposals, determine and provide the suitable type of satellite. Do not wait for proposals to come,” he said.

Saifuddin said this when interviewed on the Selamat Pagi Malaysia programme aired by RTM 1 this morning.

On another matter, Saifuddin said KKMM through the Malaysia Digital Economy Corporation (MDEC) aimed to increase the number of high-value jobs in the gig economy.

He said the growth in high-value jobs in this sector was only 20 per cent and the ministry was targeting at least 40 per cent for this year.

“The challenge being faced by us and MDEC now is not to attract workers in the gig economy because there are many but we want to increase high-value job opportunities in this sector,” he said.

Source: Bernama

KKMM to speed up provision of internet in interior areas this year — Saifuddin


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Lifestyle developer A Rock Group Holdings Bhd is actively looking for growth opportunities by merging or acquiring new businesses to ensure it continues to expand and provide top quality services post-pandemic.

The pandemic has been a disruptive factor to the tourism sector, which means there are opportunities to tap into, said Marco Hong, chief executive officer (CEO)/director of A Rock Limestone Bhd, a subsidiary of A Rock Group.

“We believe for every crisis, there would be a market changer and leader. We are looking for same-minded entrepreneurs and investors to create value through our projects,” he told Bernama in an interview.

Hence, the company is targeting the hospitality and tourism industry according to the changes in both consumer spending habits and market structure post-COVID-19, said Yan Ng, CEO/director of A Rock Coral Reefs Bhd, another subsidiary of A Rock Group.

“We are glad that our first project A Rock Coral Reefs (a Maldives concept resort) in Langkawi is ready to serve not only the local but also the international market. We have also started the second project — A Rock Limestone, because we believe in Langkawi’s potential,” he said.

A Rock Limestone is a concept resort designed after the world-renowned holiday destination in Santorini, Greece.

“Besides, the pandemic will end with the arrival of the vaccine and the tourism market will rebound. During this hard time while most companies are struggling to survive, we are moving forward,” said Ng.

Aside from its project in Langkawi, with its financial resources, the group can help those who are badly affected by the pandemic, he added.

“We are looking for strategic partners with property and services in the tourism sector. The reason we can do this is because of our financial strength.

“Together, we believe our group and its business partners will generate profits through a mixture of steady revenue streams, ranging from retail, commerce, and hotel management businesses,” said Ng.

Source: Bernama

A Rock Group eyes acquisition opportunities to expand foothold


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Phamaniaga Bhd has the capacity to manufacture two million doses of COVID-19 vaccine developed by China’s Sinovac Life Sciences Co Ltd per month beginning March this year.

Group managing director Datuk Zulkarnain Md Eusope said the vaccine would be the first to be manufactured in Malaysia at the small volume injectable high-tech plant owned by Pharmaniaga’s wholly-owned subsidiary, Pharmaniaga LifeSciences Sdn Bhd, in Puchong.

He said the group would invest RM3 million to retrofit the plant to enable the production of the vaccine.

“We are very confident in carrying out the task successfully because our technical experts have been working on the setting up of a halal vaccine plant in Malaysia since 2017.

“When the COVID-19 spread around the world early last year, we immediately chanelled our team to work with our global partners, including Sinovac on the fill and finish manufacturing activity and technology transfer to speed up the availability of vaccines against the pandemic,” he told reporters after the signing of an agreement between Pharmaniaga and Sinovac Life Sciences Co Ltd today. 

The signing ceremony was witnessed by Senior Minister (Security Cluster) and Defence Minister Datuk Seri Ismail Sabri Yaakob, Health Minister Datuk Seri Dr Adham Baba and Science, Technology and Innovation Minister Khairy Jamaluddin.

Pharmaniaga is set to carry out the fill and finish of COVID-19 vaccine developed by Sinovac Life, which is expected to be ready to be distributed to the public by end-March 2021.

The agreement is for the supply of 14 million doses of COVID-19 vaccine to be carried out for fill and finish activity.

Pharmaniaga has been engaging with the National Pharmaceutical Regulatory Agency (NPRA) to ensure that its plant continues to be in high compliance of regulatory requirements. 

Zulkarnain said the Sinovac COVID-19 vaccine has completed the phase three trials in Brazil and Turkey, and is now in the process of getting approvals in both countries.

“Currently, we are in the discussion with NPRA for registration and they have been very supportive on this project, thus we are confident to manufacture and have the vaccine ready to be distributed to hospitals by end of March 2021,” he added. 

Meanwhile, Khairy said the agreement between Pharmaniaga and Sinovac was a private initiative. 

“We have facilitated this because we have given an indication to Pharmaniaga that we are interested in the Sinovac vaccine.

“Now the government’s procurement (of) part of it, hopefully, will be concluded by next week,” he added.

Khairy assured that the vaccine programme for COVID-19 would be carried out within the first quarter of 2021.

“We are not too late and too early. We can design our immunisation programme that can reduce a lot of wastage and it will be rolled out as efficiently as possible,” he added. 

Source: Bernama

Pharmamiaga to manufacture Sinovac COVID-19 vaccine starting March


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KUALA LUMPUR (Jan 12): The Ministry of International Trade and Industry (MITI) has released a list of essential services that are allowed to operate during the enforcement of the Movement Control Order (MCO) effective 12.01am tomorrow.

Source: The Edge Markets

Here is MITI’s list of essential businesses


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Company seeks new opportunities in turnaround bid

Ipmuda Bhd, which is principally involved in the trading of building materials, is diversifying into the healthcare and renewable energy (RE) segments to seek new opportunities and turn the group around.

Given the challenging operating environment and the group’s relatively fragile financial position, executive chairman Beroz Nikmal Mirdin said Ipmuda has designed a turnaround programme to emphasise “two distinct imperatives.”

“Firstly, we are focused on stabilising the financials and operations of the existing construction, building material and contracting business. Essentially, we are strengthening the foundation of the business to ensure that once the construction sector recovers, the group is ready to catch the recovery tailwind,” he told Starbiz in an e-mail.

Beroz said efforts include delayering the organisation to reduce the number of regional offices and cost to match with demand and financial capacity.

“We are near the tail-end of this exercise and are beginning to see some of the benefits. Additionally, we have also shifted priority to higher margin, niche segments to better align with our strengths. We are also currently restructuring and rescheduling existing facilities with our bankers and suppliers.

“For financial institutions the general direction is to convert existing unsettled trade facilities and overdrafts into term loans with a deferment of capital repayment.

“This will allow us to have better control of cash flow for day-to-day business operations and to enhance the financial position of the group.”

Secondly, Beroz said Ipmuda is looking to aggressively build “alternate engines” as part of the group’s diversification strategy to promote future growth and boost profitability.

“The RE industry in Malaysia, as measured by cumulative installed capacity, will need to grow by at least five times from its 2019 installed base of 1,483MW to 7,838MW by 2025 to meet the 20% RE target as set by the government.

“We have already taken some steps to begin this transition. For example we recently announced that our wholly-owned subsidiary, Ipmuda Rensol Sdn Bhd, executed an engineering, procurement, construction and commissioning contract with Coara Marang Sdn Bhd for the construction of a ground mounted photo-voltaic solar generation facility with an installed capacity of 100MW Solar Park in Marang, Terengganu.”

Beroz said Ipmuda is exploring the possibility of offering operations and maintenance services to other RE developers.

“We believe this strategic move will enable us to tap into a profitable segment of RE with a sustainable, long-term prospect.”

As for the diversification into healthcare, Beroz said the sector is a global mega-trend of a growing number of hospital admissions and outpatient attendees, driven primarily by an aging population and increasing incidences of chronic lifestyle diseases.

“In Malaysia, the rise in healthcare expenditure is also due to the increasing affordability of healthcare services in Malaysia with medical insurance becoming more wide-spread.

“Since healthcare and healthcare-related services are essential to the population well-being, the sector is less susceptible to economic cycles and its growth rates tend to exceed gross domestic product.”

Beroz said Ipmuda intends to develop, own and operate private healthcare services involving facilities, such as private hospitals, healthcare specialists and clinics, retirement and aged-care resorts, homes or villages, as well as healthcare-related tourism under the Malaysia My Second Home Programme.

Also, with new board members at the helm, Beroz is confident that Ipmuda has the right people to see through its diversification plan.

Recently, Ipmuda announced that it would be undertaking a private placement for third party investors and a restricted placement among its directors.

“With the proposed restricted issue, we aim to raise gross proceeds of up to Rm7.68mil. This will be channelled towards estimated expenses in relation to the diversification of new businesses as well as working capital,” said Beroz.

Ipmuda’s trading segment contributes over 90% to revenue. However, for the past four financial years, revenue for the trading segment has dropped significantly from Rm412.62mil to Rm80.98mil in its financial year ended June 30, 2020.

Beroz noted that the group had been incurring losses due to the industry wide glut and slow-down of the construction and property development sectors.

Operational inefficiencies, high operating costs, the erosion of pricing and profit margins due to increased competition from both local and overseas manufacturers and suppliers have also contributed to the group’s earnings decline over the years.

“We continue to undertake business efficiency exercises for our trading division,” said Beroz.

“We foresee that the trading business segment will continue to face various challenges in the current business environment, including longer credit period for customers to make payment, pricing competition and issues with the timely supply of products due to the impact of the Covid-19 pandemic on the product supply chain.”

Source: The Star

Ipmuda diversifying into healthcare and energy


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Companies should consider incorporating digital technology

The Covid-19 pandemic may have accelerated the adoption of technology for many businesses, but it has also widened the technology gap among manufacturers.

While the need to invest in digitisation and automation has become more apparent to producers, companies are simultaneously grappling with the need to preserve cash and recover. This could mean delaying crucial investments in technology and possibly causing them to fall further behind the curve.

A survey carried out by Mckinsey & Company found that there was widespread excitement on Industry 4.0 before the outbreak of Covid-19. About 90% of respondents in the Mckinsey’s annual Industry 4.0 survey said that they were convinced of the technologies’ value and a majority of them were including Industry 4.0 as a critical part of their operational-improvement planning.

“But the pandemic has caused some companies to freeze their Industry 4.0 initiatives to preserve cash, even as certain leaders have accelerated their adoption, particularly to support business continuity such as automated planning, digital performance management and digital remote work and automation to reduce human-to-human interaction,” says Mckinsey & Company expert associate partner Kenneth Koh.

This will certainly widen the gap between early technology adopters and those still sitting on the fence.

But as businesses emerge from the crisis, the case for further digitisation will be stronger than ever. And with automation increasingly becoming more of a necessity for manufacturers, those dragging their feet will – at some point – have to relook their operations and consider how they can incorporate digital technology to improve efficiency in the business.

According to Koh, there will be three pathways to technology adoption for companies coming out of the pandemic.

The first one is “accelerated adoption” of technology for quick-win solutions that will help companies respond and adapt to the new norms, such as tracking employee health, enforcing safe distancing on the shop floor and supporting remote collaboration.

“Digital performance management (DPM), for example, has been a popular early use case at a wide range of companies, including several small precision-engineering companies where pilots of DPM have helped boost productivity by 40% to 70%,” he says.

The second route is “differential adoption rates” for more complex solutions such as logistics automation, which requires companies to have foundational information technology (IT) and operations technology (OT).

Koh notes that companies that already have the critical capabilities, such as manufacturing-execution systems, may speed ahead with the adoption of these solutions, while organisations lacking these prerequisites – particularly SMES and businesses in a more challenging financial or liquidity position – may delay implementation until they are able to build the foundations or find the required financial muscle to invest.

The third pathway is “deferred adoption” for solutions that require higher capital expenditure and have unclear or long-term payback periods. Examples of this include blockchain, nanotechnologies and the most advanced automation systems.

This will, of course, require companies to have stronger capital and know-how to be able to execute such advanced technologies in the longer run.

Better positioned

What has become apparent to companies during the pandemic is that early adopters were able to better continue their business amid the disruption of the movement control order. It was also easier for them to snatch market share while other players struggled to adjust and adapt.

This puts them in a better position to leverage the recovery and be prepared for a new economic landscape.

To bridge the gap between the technology haves and have-nots, Koh says companies will need to undergo a triple transformation across their business strategy, technology solutions and organisational culture to ultimately succeed at Industry 4.0 and to do it at scale.

“The first step that companies need to take is to have a clear articulation of the company’s desired future state, which is linked to business strategy and goals rather than the technology with the greatest buzz.

“Selection of use cases for pilots is based on a favourable business case, to be refined as the pilots are implemented,” he explains.

In terms of technology solutions, he advises companies to assess their current IT and OT systems and upgrade them accordingly to support digital and analytics, particularly for elements like the Internet of Things (IOT).

It may also be necessary to push suppliers to upgrade their IT and OT systems to ensure end-to-end horizontal integration of data.

Companies may opt to leverage external technology providers by creating an ecosystem of partners that can help them execute the digital transformation.

Ultimately, though, setting the right culture in the organisation will be key to a successful digital transformation. Koh names four factors that will be crucial support for such a change: ensuring proper governance, securing top-management commitment, acquiring the needed digital capabilities and implementing new ways of working.

“A digital transformation without a clear owner can end up as an orphan,” he says.

One of the challenges faced by SMES in implementing digital transformation is the skills gap. While companies are encouraged to upskill their employees, they could also consider hiring where necessary, to fulfill advanced digital roles such as data engineer or IOT architect.

Koh also advises companies to take the initiative to start their digital transformation on their own accord.

“Of course, it would be great if there was government support, then you can tap into that, but don’t just rely on that. Otherwise, you’ll just be following the trend of what everyone else is doing, which is to wait for somebody to move first. And that is not a way to stay ahead and be competitive,” he says.

Source: The Star

Wider technology gap among manufacturers


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It is common knowledge that the Electrical and Electronics (E&E) sector is a major economic driver for Malaysia.

In 2019, it contributed 38% to Malaysia’s exports, of which 52% comprised semiconductor-based products and solutions.

According to Us-based Semiconductor Industry Association (SIA), the global sales of semiconductors are projected to increase 5.1% in 2020 to Us$433.1bil (from Us$412.3bil in 2019), followed by an increase of 8.4% in 2021.

This growth is evident in Malaysia’s large market capitalisation traded stocks, as Bursa Malaysia cites semiconductor-related counters as one of the main themes that played favourably in 2020.

Counters like UWC Bhd and Greatech Technology Bhd showed handsome growth between 365% and 278% respectively.

Amid the uncertainties caused by the Us-china trade war, Malaysia continues to play its role in supporting the global E&E industry value-chain.

Direct E&E exports to the United States increased by 10% in 2019 while exports to other markets that are linked to the US E&E supply chain has also increased, including Singapore at 4.1%, Taiwan at 39.3%, Thailand at 4.6% and Vietnam 23.1%.

In this environment, some emerging players in this sector are exploring to expand outside of China and Malaysia is in a good position to attract and capture this E&E investment.

This trend is expected to continue into 2021 and beyond.

Another emerging trend in 2020 that is looking to be a boon for Malaysia’s E&E sector is the growth in demand for the 200mm wafer fab, which has been in the shadow of the more advanced fab of 300mm and above.

The first 200mm fabs introduced in the 1990s was the leading-edge standard for years. In the 2000s, many chipmakers migrated from 200mm to 300mm fabs.

This migration was due to the logic that a larger wafer means a chipmaker can process more die per substrate, which translates into productivity gains and lower costs.

Fast forward to late 2015 up until now, a sudden surge in demand for 200mm emerged due to its more mature processes and demand for analogue semiconductors.

Power-related products such as the Power Management Integrated Circuits (PMICS), image processing, and security have expanded exponentially due to sophistication of functions of Artificial Intelligence (AI) and IOT (Internet-of-things) devices, and these applications continue to use 200mm fabs.

Not all chips need advanced devices made from 300mm fabs.

As everyday electronics become smarter and connected to the Internet, these applications are still manufactured in older 200mm lines.

Whether it is a smart thermostat at home or a sensor in the car, the job can be managed with older generation devices. Automotive electronics is also one of the big demand drivers.

This new lease of life for 200mm fab has attracted new vendors to serve in the market. According to SEMI, the number of 200mm fabs in production worldwide is expected to increase from 189 in 2016 to 213 in 2022.

Worldwide installed capacity is expected to hit 6.4 million wpm by 2022, up from 5.8 million wpm in 2019.

For instance, silicon carbide (SIC) device makers, currently on 150mm fabs, are in the planning stages to build 200mm SIC fabs. This is driven by the electric vehicle market, which utilises SIC power devices in various parts of the car.

As majority of the chipmakers had earlier migrated, some completely, to produce 300m fabs, the surge in demand for 200mm left supply wanting in the market.

The 200mm fab capacity has been in severe shortage since mid-2019, and with suppliers still producing 200mm semiconductor equipment and tools being far and few in between, the price for such equipment has skyrocketed.

In addition to the demand in PMICS, usage in smartphones and base stations, the arrival of the 5G era further exacerbates the existing tight supply of 200mm wafer capacity.

Malaysia’s own wafer fab companies such as X-fab and Silterra are well placed to capitalise on this market demand with their existing 200mm fab capabilities.

In order to keep themselves competitive and manage commercial risks in the long run, the option to diversify into the development of larger wafers such as 300mm and beyond will continue to be a growth opportunity for these companies. But in the meantime, current market trend favours the 200mm fabs due to its price competitiveness as well continued innovation in its application and functionalities in modern day demands will keep Malaysia firmly in place as a key player in the global E&E sector.

The 200mm fab capacity has been in severe shortage since mid-2019, and with suppliers still producing 200mm semiconductor equipment and tools being far and few in between, the price for such equipment has skyrocketed.

Md Radzi is an industry veteran in technology, AI and IOT. The former CEO of Atilze Digital & Atilze A.I. is serving as director of 5ture Tech Sdn Bhd, a bumiputra technology company that focuses on transforming and scaling bumiputera technology companies. The views expressed are his own.

Source: The Star

The 200mm fab wafer – a comeback kid


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Enhanced foreign investment policy can strengthen business alliances, says chief statistician

Malaysia can further streamline its foreign investment policy to boost business networks and alliances between its companies and China firms and state-owned enterprises.

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said following the signing of the Regional Comprehensive Economic Partnership (RCEP), which is the world’s largest free trade agreement last November, Malaysia should also take the opportunity to further strengthen bilateral trade.

Commenting on the bilateral investments, the Malaysia Trade Statistics Review (MTSR) released yesterday showed Malaysia received Rm600mil in investments from China in 2018 compared with Rm500mil in 2019.

During the two years, Malaysia’s investment flows to China had increased from Rm500mil in 2018 to Rm540mil in 2019.

“Malaysia may enhance as well as further streamline the foreign investment policy to facilitate business networks and strategic alliances between Malaysian companies, with China companies and state-owned enterprises,” he said in a statement.

Mohd Uzir said China was Malaysia’s largest trading partner for the 11th consecutive year in 2019 with a value of Rm316.60bil.

He said China was also the biggest trading partner for Asean economies including Malaysia.

Over the past 19 years, trade with China had increased significantly.

In 1990, China was at 11th position with total trade of Rm3.2bil where exports accounted for Rm1.7bil and imports Rm1.5bil.

It moved up the ranks to eighth place in 2000. A year later, it was Malaysia’s fourth largest trading partner, just behind Singapore, Japan and the US – with total trade of Rm29.2bil and accounted for 4.7%.

In 2009, China became the largest trading partner for Malaysia and remained for 11 consecutive years.

“Bilateral trade value reached Rm316.6bil in 2019 and constituted 17.2% of Malaysia’s trade,” Mohd Uzir said.

Over the 1990-2019 period, the composition of trade between Malaysia and China experienced changes.

In 1990, Malaysia’s top exports to China were animal and vegetable oils and fat, while manufactured goods dominated imports.

However, in 2019, machinery & transport equipment were the highest contributor for exports and imports.

Mohd Uzir said the outbreak of Covid-19 impacted social and economic paradigms resulted from mitigation measures to halt the spread of the virus.

Interestingly, the outbreak has boosted the demand of medical supplies by both countries that contributed to a significant increase of exports and imports of selected products between the countries.

Source: The Star

Boosting Malaysia – China investments and trade


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Sumatec Resources Bhd is proceeding with its plan to take full control of the Rakushechnoye oil and gas (O&G) field in Kazakhstan, four months after hinting it may drop the proposal.


The group announced this in a filing with Bursa Malaysia today, saying it will pay RM1.55 billion to assume full ownership of the O&G field.

The plan, first announced in July 2016, involves the acquisition of Markmore Energy (Labuan) Ltd (MELL) for US$205 million from Markmore Sdn Bhd, which is owned by businessman Tan Sri Halim Saad, who is also a substantial shareholder of Sumatec.

MELL, through its wholly-owned subsidiary Markmore Central Asia BV, holds the entire participatory interest in CaspiOilGas LLP (COG), who in turn is the concession owner and operator of the Rakushechnoye O&G field.

Sumatec’s managing director Abu Talib Abdul Rahman had told reporters after the group’s annual general meeting on June 15, that the group will likely abort the plan and would instead focus on its gas utilisation plan, which includes building a liquefied petroleum gas (LPG) plant In Kazakhstan.

Today’s announcement, however, made no mention of Abu Talib’s statement.

Instead, the group said it has signed a heads of agreement with Markmore Sdn Bhd to acquire a 100% stake in MELL. The agreement is to lead to a share sale agreement within six months, failure of which would lapse the initial agreement.

It said RM1.22 billion of the purchase price will be paid in cash and the balance via the issuance of 1.68 billon new shares at 20 sen per share (equivalent to RM336 million).

Sumatec is currently the designated operator of the Rakushechnoye field, after sealing a joint investment agreement in March 2012 with MELL and COG, under which it is allowed to carry out all operations relating to the production of oil from the Rakushechnoye field.

The agreement entitles Sumatec to 100% of the profits for the first two million barrels of produced oil, and 50% of it thereafter.

The group said the proposed acquisition is expected to enable it to effectively own the entire oil and gas reserves at the Rakushechnoye field, as well as to enhance the effectiveness and efficiency of operations there.

“It is also a step in increasing the hydrocarbon reserves for Sumatec to arrest the natural production decline of the hydrocarbon production, thereby ensuring the continuous growth of Sumatec,” the filing added.

Sumatec’s board has also proposed to undertake various corporate exercises to address current financial issues. This includes a rights issue to raise a minimum of RM1.52 billion.

The rights issue involves the issuance of 7.61 billion new shares, together with 3.04 billion warrants and 1.01 billion bonus shares on the basis of 15 rights shares, together with 6 warrant and 2 bonus shares for every 2 existing shares at an indicative issue price of 20 sen per rights share.

The final issue price and exercise price of the warrants will be determined by the board at a later date.

Sumatec’s share price closed unchanged at 5 sen today, giving it a market capitalisation of RM182.63 million.

Source: The Edge Markets

Sumatec proceeds with plan to take full control of Kazakh O&G field


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